About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2019
>>
[2019] ZACT 88
|
|
Super Group Holdings (Pty) Ltd v LiebenLogistics (Pty) Ltd (LM009Apr19) [2019] ZACT 88 (16 August 2019)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM009Apr19
In
the matter between:
Super
Group Holdings (Pty) Ltd
Primary Acquiring Firm
And
LiebenLogistics
(Pty) Ltd
Primary Target Firms
GLS
Supply Chain Equipment (Pty) Ltd
Panel:
Mr
AW Wessels (Presiding Member), Ms A Ndoni (Tribunal Member), Prof F
Tregenna (Tribunal Member)
Last
submissions received on: 25 June 2019
Order
Issued on: 28
June 2019
Reasons
Issued on: 16
August 2019
REASONS
FOR DECISION
Approval
[1]
On 28 June 2019, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction
involving Super
Group Holdings (Ply) Ltd ("Super Group"), Liebenlogistics
(Ply) Ltd ("Lieben") and GLS Supply
Chain Equipment (Ply)
Ltd ("GLS"). Hereunder we collectively refer to the Lieben
and GLS as the "target firms".
Background
[2]
The hearing for this matter was set down for 19 June 2019. However,
on the eve of the hearing, the Competition
Commission ("Commission")
requested a postponement of the hearing due to the sudden
unavailability of its lead analyst
on this matter. The merging
parties did not oppose the application.
[3]
On 21 June 2019, the Tribunal issued a request to the Commission for
additional information and for the merging
parties to answer
questions that the panel had regarding the proposed transaction,
relating to inter alia product and geographic
market delineation and
the market positions of competitors in potential relevant product
markets. The Commission and the merging
parties duly filed their
responses on 25 June 2019.
[4]
On 28 June 2019 we approved the proposed transaction based on the
additional submissions received from the
Commission and the merging
parties and the existing merger record filed by the Commission.
Parties
to the proposed transaction
Primary
Acquiring Firm
[5]
The primary acquiring firm is Super Group. Super Group is controlled
by Super Group Limited, a company listed
on the JSE Limited. Super
Group controls Super Group Trading (Ply) Ltd and SG Solutions (Sasol
Contract).
[6]
Super Group is a supply chain management business. The products and
services offered by Super Group in South
Africa are classified in
three divisions, namely (i) supply chain services that offer
logistics services that cover transportation
and warehousing; (ii)
fleet solutions services that relate to vehicle leasing and rentals
solutions, as well as fleet management
services; and (iii) franchised
motor vehicle dealerships based in Gauteng, the Western Cape and the
North West province.
Primary
Target Firms
[7]
The target firms are Lieben and GLS. Both target firms are ultimately
controlled by the Liebenberg Family
Trust and the Liebenprop Trust.
[8]
Lieben is a transport company that focusses mainly on the
transportation of goods by road. It has depots and
satellite
operations in Cape Town, Durban, Johannesburg and Port Elizabeth.
[9]
GLS provides packaging solutions, outsource equipment services, as
well as equipment used to store and move
products through diverse
supply chains.
Proposed
transaction and rationale
[10]
In terms of the Subscription Agreement entered into between the
merging parties, Super Group will subscribe to 65% of
the issued
share capital in Lieben and 51% of the issued share capital in GLS.
Upon competition of the proposed transaction, Super
Group will
control the target firms.
[11]
Super Group submitted that the proposed transaction will enhance its
presence in the overall logistics market.
[12]
The target firms submitted that not only would they fit perfectly
with the services offered by Super Group but they also
wish to become
part of a larger firm in order to enhance their market presence and
improve their BEE credentials.
Relevant
markets and impact on competition
[13]
Both Super Group and Lieben are active in the long and short haul
transportation of temperature-sensitive and various
other goods.
[14]
The Commission considered the activities of the merging parties and
found a horizonal overlap in the transportation of
various types of
goods by road ranging from cold food products to dry industrial
products.
[15]
The Commission and the merging parties defined a broad relevant
product market for the transportation of goods by road
and
furthermore defined the relevant geographic market as national in
scope. The Commission however noted that the different types
of goods
transported by road require different kinds of vehicles for
transportation. The different goods include dry bulk powders
such as
cement and cement ingredients; bulk materials such as coal; chilled,
frozen and ambient temperature products; household
products; food
stuffs; groceries and perishables; and other fast-moving consumer
goods.
[16]
In the abovementioned request for additional information the Tribunal
requested both parties to motivate their broad
product and geographic
market delineations. The Tribunal further requested the Commission to
obtain information regarding the different
types and quantities of
road transportation vehicles owned by the merging parties and their
major competitors in order to do a
data comparison.
[17]
The merging parties indicated that their combined fleet consists of
(i) rigid trucks and (ii) articulated vehicles. Rigid
trucks are
trucks where the body of the truck is built onto the truck. These
types of trucks cannot easily be used for a purpose
other than that
for which the body is designed. For example, if the body of the truck
is a fridge, one cannot use the same truck
to transport coal, petrol
or dry bulk powders. That said however, the same refrigerated truck
could be used to transport chilled
goods, fresh foods or other
fast-moving goods which do not necessarily need refrigeration.
Articulated vehicles refer to trucks
where the truck tractor is
detachable from the trailer. With these types of trucks, provided
that one has the relevant trailer,
one could use the truck tractor to
pull different trailers. As such, in circumstances where one has
access to for example coal
trailers, fuel tanker trailers or dry bull
trailers, one could use the same truck tractor to pull the various
types of trailers.
[1]
[18]
The merging parties submitted that customised rigid trucks are
substitutable with the articulated vehicles provided that
the
correct/ relevant trailer is available. They further said that they
specifically select their fleet to ensure that the customer
needs are
met and that costs are kept to a minimum.
[2]
[19]
In its response to the product market delineation, the Commission
stated that it relied largely on supply-side substitution
since the
merging parties use a wide range of trucks including truck tractors
that can carry different kinds of trailers. The Commission
further
said that in the event that the merging parties are requested to
provide trucking services to a customer for products they
have not
transported in the past, the merging parties are able to either rent
or acquire a trailer to provide trucking serves to
this customer.
[3]
The Commission however does not quantify the additional costs that
would have to be incurred.
[20]
We in this case leave the relevant product market delineation open.
Thus we do not conclude on whether there is broad
product market for
the transportation of all types of goods by road, as the Commission
and merging parties contend for, or potential
narrower product
markets based on (i) the different types of goods transported by
road, for example bulk commodities such as coal
or cement, fast
moving consumer goods, products that need refrigeration, etc.; or
(ii) the different types of vehicles required
in road transportation.
[21]
In terms of geographic activities, the merging parties submitted that
Super Group has a national footprint and is able
to service customers
throughout the country through its satellites. Similarly, Lieben
(which has depots and satellite operations
in Cape Town, Durban,
Johannesburg and Port Elizabeth) is able to service customers
throughout the country.
[4]
[22]
In response to questions from the Commission to customers during its
investigation, certain of the merging parties' larger
customers
indicated that they require suppliers that have the capacity to
render services nationally since they have stores located
nationwide.
Thus, the ability of market participants to service larger customers
on a national scale should be taken into account
in the competition
analysis.
[23]
However, we, as with the product market delineation, do not in this
case conclude on the exact scope of the relevant
geographic market,
i.e. whether national or narrower in scope.
[24]
The Commission indicated that there are no national statistical data
available to establish the value and volume of the
relevant market,
but noted that there are a countless number of owner-driver small
entity haulers. The Commission did however collate
information
related to the number of vehicles owned by the major market
participants and on that basis found that the merged entity
will have
a national market share of less than 15% in the (broad) market for
the transportation of various types of goods by road.
[25]
The Commission concluded that the proposed merger is unlikely to
substantially prevent or lessen competition in the broadly
defined
relevant market because the post-merger national market share of the
merged entity is relatively low. In addition, there
are several other
players that customers can choose from that would constrain the
merged entity.
[26]
We approve the proposed transaction on the basis that the merged
entity will continue to face competition from a number
of rivals
including large firms such as Unitrans Limited, Imperial Logistics
Company and Barloworld Logistics that operate within
the different
market segments with a variety of vehicles and that have a national
footprint. There are also a number of other smaller
players that
offer their transportation services regionally.
[27]
Given the above, we have no reason to believe that the proposed
transaction is likely to substantially prevent or lessen
competition
in any (potential) relevant market.
Public
interest
[28]
The merging parties confirmed that there will be no job losses or
retrenchments in South Africa as a result of the proposed
transaction.
[5]
[29]
The proposed transaction raises no other public interest concerns.
Conclusion
[30]
In view of the above, we conclude that the proposed transaction is
unlikely to result in a substantial prevention or
lessening of
competition in any relevant market. Furthermore, the proposed
transaction does not give rise to any public interest
concerns.
Accordingly, we approve the proposed transaction unconditionally.
Date:
16 August 2019
Mr
AW Wessels
Ms
A Ndoni and Prof. F Tregenna concurring
Tribunal
Case Manager
For
the Merging Parties For the Commission: Ndumiso Ndlovu
B Seleke of Fluxmans
Attorneys
R Maphwanya and I Mhlongo
[1]
Merging parties' submission dated 25 June 2019.
[2]
Merging parties' submission dated 25 June 2019.
[3]
Commission's submission dated 25 June 2019.
[4]
Merging parties' submission dated 25 June 2019.
[5]
Merger record, pages 6, 14 and 68.